The year 2025 will be challenging for small and medium-sized enterprises, according to the Omie Index of Economic Performance of SMEs (IODE-SMEs). The survey indicates that the revenue of small and medium-sized Brazilian companies (SMEs) experienced a 1 decline,2% in the first quarter of this year, in comparison with the same period of 2024. Regarding the fourth quarter of 2024, the fall was even greater (-1,5%)
This performance represents the worst result of the indicator since the last quarter of 2021, reflecting the loss of breath in certain segments of Services, in addition to the contraction in SMEs in the industrial and infrastructure sectors
Figure 1: IODE-SMEs
(Index number – base: average 2023=100
Sources: IODE-PMEs (Omie)
The IODE-PMEs functions as an economic thermometer for companies with annual revenues of up to R$50 million, consisting of the monitoring of 736 economic activities that make up four major sectors: Trade, Industry, Infrastructure and Services
For Felipe Beraldi, economist and manager of Indicators and Economic Studies at Omie, cloud-based management platform (ERP), The IODE-PMEs already indicated a significant loss of momentum in the SME market starting from mid-October 2024, amid the deterioration of the domestic macroeconomic scenario. Despite the continued growth of real labor income — main component of Brazilian families' income —, the increase in fiscal uncertainties regarding the coming years has pressured inflation expectations and driven up interest rates, jeopardizing the purchasing power of families, explain
In the external scenario, the environment has also become more hostile, facing the uncertainties related to the US tariff policy under the Trump administration and the responses adopted by other major economies, with emphasis on China
A data that reinforces this outlook of greater difficulties for the growth of SMEs' businesses was the sharp decline in consumer confidence between December 2024 and February 2025 (-7,6% in the period, as pointed out by the Consumer Survey of FGV-IBRE. This decline reflected, above all, the worsening of economic agents' expectations
In the same direction, the latest edition (March) of the Omie Small Business Survey, strengthens this outlook of deterioration of small entrepreneurs' expectations regarding the domestic economic environment. The survey shows that entrepreneurs are more pessimistic, with 51% signaling a worsening economic outlook, higher number than the 39% of the survey conducted in September 2024. In this context, the decline of IODE-PMEs in the first quarter of 2025 reinforces the perception that this will be a more challenging year for the Brazilian economy, comment the economist
Despite setbacks in various sectors at the beginning of the year, Trade remained in positive territory, according to the index. SMEs recorded a growth of 7,9% in the average real revenue in the first quarter of 2025, in comparison with the same period of 2024. However, the disaggregated analysis shows quite different performances between wholesale and retail
The wholesale trade SMEs showed a significant growth of 10,2% in this first quarter, driving overall market performance. Wholesale trade of beverages, Wholesale trade of resins and elastomers and wholesale trade of paper and cardboard waste were the activities with the greatest prominence.
Already in retail, after signs of recovery throughout the second half of 2024, the SMEs registered a modest decline of 1,3% in this first quarter. Retail of veterinary medicines, 'Retail of office equipment' and 'Retail of books' were the activities that continued to show positive performance during the period
Figure 2: IODE-PMEs – sector openings
(1T2025 x 1T2024)
Sources: IODE-PMEs (Omie)
The Services sector is the largest market for SMEs in terms of the number of companies. In the segment, The IODE-PMEs indicates stability in average revenue, with variation of -0,2% compared to the same period of the previous year. On one hand, the sector has been negatively impacted by the weakening of activities that stood out in 2024, as 'Food', Professional activities, scientific and technical and personal services. On the other hand, the sector had good numbers in the 1st quarter due to the growth of 'Information and communication' activities, 'Transport and Storage' and 'Financial Activities'
The results of retail SMEs and some segments of the Services sector highlight the recent impact of increased inflationary pressures and the decline in economic agents' confidence, factors that have reduced the households' consumption momentum. Furthermore, the scenario of rising interest rates in the country has especially harmed capital-intensive activities, how they demonstrate the IODE-PMEs results in the Industry and Infrastructure sectors
In the Industry, there has been shortness of breath since the second half of 2024, with the recession intensifying in the first months of 2025. In the first quarter of this year, the sector recorded a decrease of 5,8% and the retracement among industrial SMEs is widespread across the activities monitored by the index. Of the 23 subsectors of the manufacturing industry monitored by IODE-PMEs, 15 showed negative performance. Even so, there are activities that demonstrated resilience and continued to grow during the period, with emphasis on: 'Printing and reproduction of recordings', Manufacture of wood products and Manufacture of metal products
In the Infrastructure segment, SMEs have resumed declining, with a 3-point retracement,3% in this first quarter, after the positive performance recorded in the fourth quarter of 2024 (+9,7% YoY. The negative result affects activities such as 'Infrastructure Works', 'Building construction' and even 'Specialized services for construction'. On the other hand, the maintenance of growth in 'Water' activities, sewage, "waste management and decontamination" contributed to preventing an even sharper decline in the sector as a whole in recent months
Finally, the IODE-PMEs also allows regional analysis of the behavior of Brazilian SMEs. In the first quarter of 2025, the index reveals that the SME market remained in positive territory in the Southeast regions (+0,6% YoY) and, especially, Midwest (+2,5% YoY. On the other hand, was registered, on average, a contraction in the Southern regions (-3,5% YoY, Northeast (-3,5% YoY) and North (-10,4% YoY, which reinforces the heterogeneity of the market across different regions of the country
According to Beraldi, even with major macroeconomic challenges on the radar, the basic scenario for the Brazilian economy does not suggest a complete halt to growth. In general terms, the recent IODE-PME results reinforce the expectation that the SME sector will grow more in line with the overall projections for the Brazilian GDP (with the median of forecasts currently around 2%, according to the Central Bank's Focus Bulletin. This scenario is different from the past years, when the SME market grew at a faster pace than the overall economy, evaluate
